|
Vietnam lacking gold in kind: Expert
The lack of in-kind gold proves to be the main reason that the domestic gold price is higher than on the world’s market. Experts believe that it is now the right time for the State Bank of Vietnam to allow gold imports.
Nguyen Thanh Truc, Deputy Chairman of the Vietnam Gold Business Association, also Director of Agribank’s Gold, Silver and Precious Stone Company, affirmed that the lack of in-kind gold proves to be the main reason behind the big gap between the domestic and world’s prices.
In the last few years, Vietnam has been one of the leading nations in the world in terms of gold imports. On average, domestic companies import 60-70 tonnes of gold every year. However, the government decided to disallow gold imports at the end of May 2008. In the first quarter of 2009, the domestic gold price suddenly dropped significantly, becoming VND300-900,000/tael lower than the world’s level.
Within just a short time, domestic companies exported $2bil worth of gold, helping much to improve the trade balance. However the exports have led to the significant decrease of in-kind gold in the domestic market.
The domestic market has bounced back, becoming higher by VND200-300,000/tael than the world’s level. The short supply has caused difficulties for domestic gold trading companies.
As the companies cannot control the input gold volume, they cannot set long-term business plans.
Truc has suggested that the State Bank of Vietnam allow enterprises to import gold at this moment to make profit from the gap between the domestic and world’s prices.
“The government should allow gold imports again to stabilise the domestic market. A normal market needs to include both import and export activities,” Truc said.
He went on to say that if the government does not allow imports of gold, the gap may widen, thus causing losses to consumers. Meanwhile, the price gap will prompt illegal cross-border gold trading.
The Vietnam Gold Business Association many times has asked the State Bank to remove the licence for gold import and export. However, the proposal has not been accepted to date.
“If businesses had not been allowed to import gold before, they would not have been able to export the $2 billion worth of gold in Q1 2009,” Truc said.
He added that the central bank should allow businesses to import a gold volume equal to 1/3 or ¼ of the gold volume exported in Q1 2009, with the estimated value of $400-600 million.
A reasonable volume of imports, according to Truc, would not affect the trade balance in general, and gold trading activities in particular.
“The gold price is tending to increase in the world’s market, and when the prices are good, enterprises will export gold to get foreign currencies,” he added.
The gold price has soared to a 6-week record high price. In Hanoi, gold is being traded at over VND20 million per tael, while the world’s price stays at $925/oz.
Phuong Hoang brand name PNJ-DAB was traded at VND20 million/tael (purchase) and VND20.05 million (sale) early May 14. Yesterday, price levels were VND19.93 million and VND20.07 million/tael.
VietNamNet, VnMedia
|
